Are retirees stupid, because they pay proportionally higher fees for the current account?

24.9.2015

People are creatures of habit. And this even more, the older they get. That can be good, because one can rely on tried and tested.

However, regarding a current account, this habit can make you pay, because banks and savings banks know that hardly any retiree changes the account.

It is no coincidence that retirees

pay the highest bank charges,

receive the worst service,(because they hardly are lending clientele, where the banks obviously earn most)

receive the lowest interest on savings,

must pay fees for services that are free elsewhere.

Yes. By changing the current account, which is done more easily for retirees than for many families that need financing and thus have to tie themselves longer to a bank.

Retirees usually belong to the people with credit balances that permit them to choose the best banks.

Whether this applies to you or your parents, you will find out through this article. Finally, there are also reasons to keep the expensive current account at the bank on the corner.

This article is not intended to sugarcoat anything, but to show pure facts and to look at them from different angles. Whether you make changes to your finances then, is entirely up to you.

Case study Aunt Erna – local savings bank Sparkasse

Aunt Erna has been living on the second floor since 20 years. Her bank, the local savings bank, is not far. The nearest branch office is situated at the intersection of the next crossroad. The opening hours are reduced and the staff has been changing more and more often during the last years.
After many explications of the bank´s staff members, Auntie is using the transfer machine since last year, as the transfer forms made of paper bear extra costs nowadays. These are no more included in the monthly account management fee of Euros 6.

Many German retirees face the same issues as Aunt Erna.

They pay high fees for services that are elsewhere cheaper or even free.

But why doesn´t Erna simply change the bank?

There are actual reasons (facts) and alleged reasons (excuses).

An expensive local bank is required, if following applies:

cash must be deposited occasionally to regularly,

one needs a safe deposit box to store valuable things,

one needs “banking consultancy”, at which you can sit opposite,

one does not want to give up on the old transfer forms, although these are highly paid for.

Excuse number 1:

Online banking is not safe!?

One of the most common alleged reasons to not change ones bank is: online banking is not safe!

Really? So why do more than 50 million German people use online banking? Also the banks use online banking!

As everywhere, there are dangers. However, one can learn to deal with them. Cycling, driving, walking … these are all things with which you can harm yourself, but we have learned to deal with them. This also applies to online banking.

Especially for people like Aunt Erna, who submit their transfers into the banking terminal in the entrance hall of the bank. It would be safer and more comfortable for her to make these transfers using the own computer at home. You can save a lot of time, because you do not have to leave the house.

If you only want to try it, you do not need to change your current account right away. You can activate the online banking at the savings bank. If you like it, you have made a positive change without changing your bank (online accounts are cheaper than offline accounts at most savings banks).

Surcharges for a credit card?

Aunt Erna makes a trip abroad twice a year. Therefore, she needs a credit card. She got this without objection from their savings bank. After all, the creditworthiness is given unequivocally: no debt, regular income.

Cost: Euros 36 per year

I said, “What??”, when she told me! Credit cards are given to any 18-year-old nowadays for free. Even by some savings banks that charge the annual fee for credit cards only from the age of 22.

Modern direct banks charge absolutely no fees for credit cards, as they earn through the use of it. The merchant to whom you pay with the card, has to pay fees for the payment.

A credit card always must be possible without charges!

This also applies to the good old EC-card (debit card). The merchant must pay higher fees when one pays with credit card. Therefore, direct banks supply their customers so generously with credit cards. For free, of course!

at the counter or through the machine in the branch office free of charge

Everywhere in the world through Visa ATMs free of charge(in 99% of cases also at your current ATM of the savings bank (Sparkasse) – not at the counter)

Cash deposits

free of charge within opening hours of the branch office

free of charge around the clock at deposit machines(not available nationwide)

Security deposit box

gegen Gebühr meist möglich

nicht vorhanden, da keine Filiale

Cards to the account

Giro and credit card most often subject to charge

Giro and credit card are always free of charge

Availability of the staff members

within the opening hours

around the clock also on the weekend or on holidays

Killer argument: social commitment?

I recently had an interesting telephone conversation with the head of a municipal educational institution. In summary, he said that it is important that one is a savings bank customer, because savings banks support social projects!

Isn´t it the task of the state to ensure a social balance? Does the state not receive taxes from us all? Should the account management fee for retirees be understood as an additional tax to fund welfare projects?

Account fees of retirees as a kind of additional tax?

Possibly, not all direct banks invest or not as much as savings banks in social projects. However, if one does not take the people´s money through fees, then they can decide for themselves whether and how much money they want to give to social projects!

One of my favourite banks – the DKB – is known for its extensive sports promotion!

Do I like savings banks?

Yes, because I love the variety. In Germany, we have created a relatively stable and solid banking system, which is based on several pillars:

Sparkassen (mostly belong to the cities and counties)

State banks (less interesting for us private customers)

VR banks (owned by their members)

Private banks (are owned mostly by their shareholders)

Direct banks (various ownership structures)

Each of these pillars has its license and supports the banking system in Germany as a whole.

Where you want to be a customer, can be decided by yourself freely. The system does not crash, if bank customers switch from one pillar to another or become customers in multiple columns.

I myself have mainly opted for the direct banking pillar (private current account).

Which bank is recommended?

There is no general recommendation on my part that retirees should open a current account at one or another bank. All banks that we observe on this special portal are very good and even perfect for some constellations, for example, for German retirees, who live permanently or temporarily abroad (long term traveler).

Aunt Erna changed to the DKB

Auntie Erna became a customer of the DKB, because she realized that she gives up little, but gains a lot, especially the cost freedom for her as a retiree:

free account management

free bank card

free credit card

free cash supply everywhere she travels

phone availability of the bank around the clock

… and now she makes her transfers via online banking, no longer through the banking terminal in the entrance hall of the savings bank. She still goes there from time to time in order to withdraw cash from the ATM. This works great and is free of charge with the DKB Visa card.

“Open the DKB account now”

Alternative for retirees, who want to deposit cash

If she would have to deposit cash to her current account, the Comdirect Bank would have been interesting for Erna, as the cash deposits through the Commerzbank are free of charge. Nevertheless, as a retiree, this is actually something that she does not need.
Additionally, we offer you a comparison calculator for current accounts – this is not specifically for retirees, but retirees are also ordinary people. One can get used to all the senior tickets and seniors portions … in principle, it is a simple current account that is the same for all people.

The difference is the choice of bank.

What do you think: Should retirees continue to pay account management fees?

The comments box is activated for your opinions and additions, as well as for your tips!

Important addition (due to a recent reader´s mail)

Who plays with the idea of living abroad as a retiree, or spending a part of the year (for example, during the winter months in the southern countries), almost must move the current account to the DKB or Comdirect. At best, one opens the account before departure, however, a later account opening from abroad is also possible at both banks.

Background: The DKB as well as the Comdirect have many customers with residence abroad and are therefore adjusted to the specifics. Additionally, the conditions with the free cash withdrawals worldwide and possible refund of foreign fees as well as the convenient availability by telephone is ideal, despite a possible time difference.

We have learned from readers and fans(linked page in German language) that other banks take actions from eliminating the overdraft facility up to the threat of cancellation due to a foreign residence. This is frightening.

Especially when you are abroad, the maintenance of an expensive retail bank account makes little sense.

The desire to spend the retirement abroad has risen in the past few months. As a cause, it was stated that one has a better quality of life. This is especially true for retirees, who must live thrifty in Germany, because of low pensions. In Thailand, for example, these retirees are among the good earners and can afford more for their money.

A new addition is the refugee crisis. There are many people – especially the elderly – who are very worried. An emigration to a place where you are welcome as a German retiree, is an alternative one may think about.

Tip:

Whether you are already retired or not, you should get this current account today, as it gives you the freedom to decide where you want to have your centre of life. Mobilize yourself financially – even if it will only be a secondary account at first.